Leaving an inheritance to a spending addict; will this work?

I think that the trust fund with a monthly allowance is not a bad idea.

In fact I can think of many situations where this would be a beneficial approach to adopt.

We had a VLC SIL in our family too like this. High level demanding career, spent her money like water and never saved. I think spending gave her an endorphin high. Blew through an inheritance of 250k in a year (nothing much to show for it) then starts texting DH asking for his (much smaller) portion of the money when the taxman caught up with her because of her job.
Her DPs were well aware of her financial track record as they had bailed her out many times over the years. They did consider putting a trust in place in their wills but thought her 2 siblings (executors) would keep an eye on her finances and ensure she didn't blow it all. I think they ignored the link between stress and her need to spend. DH and BIL couldnt "control" or regulate her access to the cash because there was no trust and so she blew it anyway. She sadly died 18 months later but we were so relieved we weren't involved as executors in detangling and resolving the financial mess we heard she left behind.

seeing your update OP, then actually if you go for the 25%/75% split in favour of her brother, with a note saying this is to balance out her “getting inheritance in advance” when she was given money to cover her debts and living costs, then don’t have her brother give her anything else. He has to hold the line he gives her nothing so she’s not always asking. Really she needs to completely fail to get help. If giving her a rent free property just meant she felt entitled to have all her living costs covered by her dad, then don’t have her brother opening the door at all to him being the replacement of dad who bails her out.

Giving her a lump sum that’s just the 25%, accepting she might spend it, then also accept that help from parents when they were alive hasn’t fixed the problem so throwing more money at it won’t either. At some point she’ll have to chose to change, or be forced to. Helping keep the plates spinning is doing her no favours.

This is pretty good advice.

knew someone who as an alcoholic and his parents left him a large sum of money that was paid out to him on a regular basis. no point in giving a large amount as they knew what would happen

Another option - how much money are we talking about, enough to buy a flat ? If so, I’d go with that, a flat that belongs to the brother, but the sister can either live in it or have any profit from rental (setting it up with an amount held back for renovations /repairs). She gets either free roof over her head or an income but she’ll not own the property so it can’t be repossessed/sold to cover debts.

OP - you said her dad didn’t want to give unequal shares, but if they’ve bailed her out in the past, could more be given to the son to balance that out? Say, she’s gets 25% and he gets 75% with a note to say this was to allow for money already given to dd during her parents’ lifetimes to cover previous debts.

If you set up a complex (and possibly expensive) arrangement that forces her to clear her debts, as others have said she’ll just run up more. So a small % to her in cash, she’ll either pay down her debts or spend it but she’ll be in the same position in 5 years time. The rest to the brother, with a separate letter telling him why this has been done and if he feels he wants to make it closer to 50/50 he should instead directly pay down some of her debts, not just give her a lump sum.

But it's blown either way whether you leave it to her to spend in the future or to pay back a bank I.e. she still has the holiday/new jeans/crap.

Either way you're facilitating her.

Personally I wouldn't want my money going to a bank and I'd behaving an upfront conversation about how her money management means no inheritance. It doesn't mean you don't love her, just that you don't value money in the same way.

As for eat you do with her share..? Charity or brother. Does she even have a relationship with her sibling?

FWIW @Newblackdress this does seem like a situation where a trust with a solicitor as a trustee might work for her share of the inheritance. Yes it will cost money but possibly less than she would spend given free access. And in time it will be for her DB to stand up for himself. I don't see this as controlling I see it as trying to do the best for her. I think better than leaving her nothing

@WeCouldDoBetter What does it matter if you are dead? Is this woman actually loved? It sounds like she’s resented and a total annoyance. When you are dead, let it go!

Agree. I have a relatively like this, which keeps being bailed out only to run up more debt again. It's an endless cycle and such a huge waste of money.

@Newblackdress It’s control. Whether you like it or not, he doesn’t approve and he wants to control from the grave. He’s now apparently favoured DS already. Probably spending DD knows where she stands in the family!

How much money are we talking?

if it’s enough to be meaningful over a long time a trust is the way, or a pension.

However if you do this you should think about treating both children the same and that might be hard for her brother.

If not a significant sum it’s really the same whether you give it to her (she’ll spend it but not go into further debt) or pay the debts (they’ll be paid but she’ll be creating new ones).

I have an acquaintance like this who has gone through serious money, thinking it would never run out, until it did. It’s not pretty and I understand the worry as it’s turning out very very sadly for the person I know. So, if you can try to find a way for her to have some kind of steady income in later life I would. Maybe she’ll learn to budget, or not, but at least there’s a chance.

Would her "share" be enough for a small flat which could be owned by a trust managed by her brother & solicitor initially, then just the solicitor ? She could be given an interest for life in the property, but then on her death it is sold with proceeds given to a nominated charity? As she doesn't own it, she can't borrow against it, and if she doesn't want to live in she can let it and have a modest steady income from the rent.

Many people set up Trusts - its not nice to be on the other end of, but may be a good idea here.

Give the money to charity - or spend it all. There will be no money to fight over.

Could your dh insist it goes into her pension fund instead so she has something to live on when she's older? That way she's likely to have xx amount per month.

What's being proposed feels unhealthy.

She'll be bereaved and be sent a 'message'. That's potentially very damaging.

I think your DH could use some emotional support to deal with his feelings about this in a better way. Her failure to care for herself is terribly sad but maybe not trying to control it would give her space to take control herself.

Good luck.